EXPLANATORY STATEMENT
STATUTORY RULES 1990 No. 390
Issued by the Authority of the Treasurer
INCOME TAX ASSESSMENT ACT 1936
INCOME TAX REGULATIONS (AMENDMENT)
The Regulations amended the Income Tax Regulations in a number of respects.
First, the regulations amended the Income Tax Regulations to repeal the regulation that prescribes an area in and around Namibia for the purposes of granting an exemption from income tax, available under section 23AC of the Income Tax Assessment Act 1936 (the Act), in respect of the pay and allowances made to Australian Defence Force (ADF) personnel serving in that region This regulation is no longer necessary in view of the permanent withdrawal of ADF personnel from Namibia on 10 April 1990.
The existing regulations governing the procedure and jurisdiction of the Taxation Boards of Review are repealed. These regulations, are redundant as a result of the abolition of the Taxation Boards of Review and the transfer of the jurisdiction from 1 July 1986 to the Administrative Appeals Tribunal under the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986. The regulations make certain other consequential amendments to the Income Tax Regulations following the abolition of the Taxation Boards of Review.
Further, the amending Regulations prescribe the information to be submitted to the Commissioner of Taxation by those employers who are required to remit tax instalment deductions made from the salary or wages of employees to the Commissioner on a twice-monthly basis.
Under section 221EC of the Act an employer who makes tax instalment deductions in excess of $5 million in relation to the financial year ended 30 June 1989 or a later year is required t< remit the tax deductions on a twice-monthly basis. The employers, known as early remitters, who meet the $5 million threshold in the financial year ended 30 June 1990 or a later year, must notify the Commissioner by 14 August following that year that they are required to remit the tax deductions twice-monthly.
These regulations prescribe the information that must be included in the notice.
Finally, the amending Regulations make two changes of a minor nature by repealing regulations which have become redundant.
A detailed explanation of the amendments follows.
Regulation 1 amended the Income Tax Regulations (the Regulations) in accordance with these regulations.
Regulation 2 repealed regulation 7 of the Income Tax Regulations which prescribed Namibia as a special area for the purposes of the exemption from income tax available under section 23AC of the Income Tax Assessment Act 1936 (the Act) to Australian Defence Force (ADF) personnel serving in this special area. Regulation 7 is no longer required in view of the permanent withdrawal of all ADF personnel from Namibia on 10 April 1990.
Regulation 3 repealed regulation 12 of the Regulations which prescribed institutions of advanced education, gifts to which qualified for a deduction under subparagraph 78(1)(a)(xliii) of the Act. Regulation 12 is no longer necessary as subparagraph 78(1)(a)(xliii) has been repealed.
Regulation 4 omitted subregulation 17(3) of the Regulations and replaced it with new subregulation 17(3). This corrects a technical drafting error in the current subregulation whereby a reference is made to paragraph (1)(ab) of regulation 17 which was omitted from the Regulations by Statutory Rules No. 152 of 1990.
New subregulation 17(3) of the Regulations operates in the same way as the previous subregulation and ensures that where a company has provided information in a report under subregulation 56(1), the company will not be required to provide that information in a statement required to be included in the company’s return of income for the purposes of regulation 17.
Regulation 5 repealed regulation 4 3 of the Regulations which is an interpretative provision in relation to regulations dealing with the former Taxation Boards of Review.
Regulation 6 amended subregulation 44(2) of the Regulations which deals with the form in which an objection may be made to the Commissioner of Taxation. Subregulation 44(2) currently provides that an objection (lodged under section 185 of the Act) shall be posted to, or lodged with, the Commissioner at the appropriate place and within the prescribed time period. By the amendment an objection is required to be lodged with the Commissioner at the appropriate place and within the prescribed time period. This makes it clear that objections must actually be in the Commissioner’s possession, and not merely posted to the Commissioner, within the time limit. The amendment to the Regulations reflects the requirement of the Act.
Regulations 7 to 14 repealed regulations 45 to 52 of the Regulations, respectively. Regulations 45 to 52 set down various aspects of procedure applicable to hearings before the Taxation Boards of Review, such as notification to parties of time and place of hearing (regulations 46 and 47), manner in which the review is to be conducted (regulation 48), matters of evidence (regulation 49), notification of a Board’s decision to parties (regulation 50) and other similar procedural matters.
In view of the abolition of the Taxation Boards of Review from 1 July 1986, and the transfer of the jurisdiction to the Administrative Appeals Tribunal (AAT), these regulations are no longer relevant. The procedural aspects of hearings before the AAT are specifically provided for in Part IV of the Administrative Appeals Tribunal Act 1975 and its accompanying regulations.
Regulation 15 renumbered regulation 53 so that it is now regulation 45. In addition, it inserted a new subregulation (2) which is an evidentiary provision concerning the production of certificates in appeal proceedings. These certificates are used by the Commissioner to indicate that he is of the opinion that there was an avoidance of tax which was due to fraud or evasion.
Regulation 16
Background
For the purposes of enabling income tax to be collected from the salary or wages of employees by instalments, employers are required, by section 221C of the Act, to deduct amounts prescribed by the Income Tax Regulations (generally referred to as “tax instalment deductions”) from the salary or wages that are paid to employees.
An employer who employs more than ten employees, or makes ten or more eligible termination payments in a twelve month period is, by section 221F of the Act, required to register as a “group employer”. Depending on the employer’s particular circumstances, the Commissioner of Taxation may allocate one or more group registration numbers to the group employer in each State or Territory in which employees are employed.
Group employers must generally forward any tax instalment deductions made in a month to the Commissioner no later than the twenty-first day of the following month.
SR No. 298/90
Certain group employers, however, may be required to remit the tax instalment deductions to the Commissioner on a twice-monthly basis by section 221EC of the Act. Broadly, the requirement to remit tax instalment deductions twice-monthly will fall on employers who make tax instalment deductions in excess of $5 million in relation to the financial year ended 30 June 1989 or a later year. An employer who becomes liable to remit twice-monthly is to continue to remit on that basis in future years.
Employers who are members of a wholly-owned group of companies are also required to pay any tax instalment deduction on a twice-monthly basis are called “early remitters” (subsection 221A(1) of the Act).
Subsection 221F(12A) of the Act requires employers who become early remitters because they reached the $5 million threshold in a financial year ending on or after 30 June 1990 to notify the Commissioner by 14 August following the end of the financial year. The notice must be made in accordance with regulations made for that purpose.
An employer who fails to give the required notice is guilty of an offence, punishable on conviction by a fine not exceeding $50 per day until the notice is provided (subsection 221F (12A)).
Effect of the Regulation
Regulation 16 inserted a new regulation 120A in subdivision 5 of Division 2 of Part 7 of the Income Tax Regulations, new regulation 120A.
New subregulation 120A (1) prescribes the information that must be included in a notice referred to in paragraph 221F(12A)(c) of the Act.
Provided the employer provides all of the information prescribed in subregulation 120A(1), notice may be given by the employer in any format, or alternatively, the employer may use a form of notice which will be made available by the Commissioner of Taxation.
The notice must state the full name, trading name (if any) and postal address of the employer and the name of a person (if applicable) who may be contacted in relation to the notice and their telephone number during business hours.
The employer must also state each group registration number allocated to the employer in the State or Territory in which the notice is given as well as details of any other State or Territory in which a group registration number has been allocated. Unless the details of those group registrations have been already given to the Commissioner in a separate notice, the employer must also provide those numbers.
If the employer is a member of a wholly owned group of companies (that is a member of an eligible employer group within the meaning of Division 2 of Part IV of the Act) the notice must state the name of every other company in the group and each group registration number, in each relevant State or Territory. The employer, however, will not be required to provide any group registration numbers in respect of which a separate notice has been given.
If the Commissioner reasonably requires any other information for the purposes of subsection 221F (12A) of the Act, that information must also be be provided.
New subregulation 120A(1)(b) requires the notice to be signed by the employer. In this regard, if the employer is a company, regulation 120 of the Income Tax Regulations provides that the notice would need to be signed by the company’s public officer.
Subregulation 120AC2) states that a notice under subsection 221F(12A) of the Act may be given to the Commissioner by delivering it to the office of a Deputy Commissioner.
Subregulation 120A(3) makes it clear that, for the purposes of the new regulation 120A, a reference to a “group registration number” is a reference to a registration number allotted under subregulation 115(1) of the Income Tax Regulations in respect of all employees, or any class of employees, of the employer. Subregulation 115(1) authorises the Commissioner to register all or a class of employees of a group employer as a group for the purposes of the Income Tax Regulations.
As the new regulation 120A setting out the form of notice under regulation 120A will not come into effect until after 14 August 1990, no penalty can be imposed on an employer who was required, by subsection 221F(12A) of the Act, to notify the Commissioner by 14 August 1990.
The penalty imposed on employers who fail to notify the Commissioner that they have become early remitters (section 221F(12A)) will first apply to employers who fail to notify the Commissioner before 14 August 1991 that they have become early remitters on reaching the $5 million threshold in the year ending 30 June 1991.